World economy talk

[uls]

earlier today

Reuters
EM ASIA FX-Rupiah leads gains on inflows, dollar weakness
Mon Oct 5, 2009 10:48am IST

* Rupiah hits one-year high on foreign buying of local assets

* Peso rises as Filipinos send money from abroad after floods

* Singapore dollar firms on broad U.S. dollar weakness

The peso PHP= rose 0.8 percent to 46.74 per dollar, a nine-month high, as remittances poured in from workers overseas after Parma, the strongest typhoon to hit the country since 2006, slammed into the remote northwestern Philippines and killing 17 people.

"A lot of remittance flows are coming in as concerned relatives abroad are sending money to their loved ones," said a Manila-based trader. The central bank had bought dollars to slow the peso's rise, traders said.

my guess is 46-47

the Bangko Sentral isn't gonna raise rates yet

if they do, the Peso will strengthen further

Philippines May ‘Err on Caution’ in Timing Rate Rises (Update1)
http://www.bloomberg.com/apps/news?p...d=aYxQQ7WUuwwc

Oct. 5 (Bloomberg) -- The Philippines will probably “err on the side of caution” in deciding when to raise interest rates as inflation is contained and the economy still needs support, central bank Governor Amando Tetangco said.

Bangko Sentral ng Pilipinas has other tools it can use to absorb any excess liquidity generated by capital inflows and there is little risk of asset bubbles forming in the Southeast Asian nation, Tetangco said in an interview in Istanbul yesterday, where he is attending the annual meetings of the World Bank and the International Monetary Fund.

Leaders from the Group of 20 nations last month pledged to preserve the global economic recovery and wait to pull back emergency government assistance until “the time is right.” The Philippine central bank left rates unchanged at a record low for a second straight meeting this month.

“There’s never going to be perfect timing” in implementing exit strategies, Tetangco said. “One would say that you should probably err on the side of caution and not stifle the nascent recovery. We can afford to keep the stance of monetary policy at this point in time given the favorable inflation outlook and the need to still support economic activity.”

The Philippine peso strengthened 0.6 percent to 46.77 per dollar as of 9:47 am in Manila, its highest level in almost eight months.

[uls]

++++++++++++++++++++++++

[br733]

thanks for the feedback:-)

[uls]

Gold hits record due to USD weakness

Gold price hits record high of $1,036.60 an ounce
(AFP) – 41 minutes ago
LONDON — The price of gold struck an all-time high point of 1,036.60 dollars an ounce here on Tuesday as the dollar fell on a reported plan by Gulf states to stop using the greenback for oil trading.

Gold reached the level at about 1310 GMT on the London Bullion Market, beating the previous record high of 1,032.70 dollars an ounce struck in March, 2008.

After striking the new pinnacle, the price of gold pulled back slightly to stand at 1,031.65 dollars.

"Gold prices hit an all-time high as the dollar weakens," said Barclays Capital precious metals analyst Suki Cooper.

"The dollar weakness appears to be related to ... (reported) secret talks about oil being priced in a basket of currencies including gold rather than the dollar, which has added to concerns about the future role of the dollar in international financial markets."

The dollar's future as the world's top currency was thrown into doubt on Tuesday as a report said Arab states had launched secret moves with China and Russia to stop using the greenback for oil trading.

Arab states have launched moves with China, Russia, Japan and France to stop using the dollar for oil trades, British daily The Independent reported on Tuesday, but the report was denied by Kuwait and reportedly by other nations.

It comes as the United Nations on Tuesday called for a new global reserve currency to end dollar supremacy, which has allowed the United States the "privilege" of building a huge trade deficit.

The Independent's Middle East correspondent Robert Fisk wrote in his paper: "In the most profound financial change in recent Middle East history, Gulf Arabs are planning -- along with China, Russia, Japan and France -- to end dollar dealings for oil."

They would instead switch "to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council (GCC), including Saudi Arabia, Abu Dhabi, Kuwait and Qatar," added Fisk.

the following is the article being mentioned above

http://www.independent.co.uk/news/bu...r-1798175.html

The demise of the dollar

In a graphic illustration of the new world order, Arab states have launched secret moves with China, Russia and France to stop using the US currency for oil trading

By Robert Fisk

Tuesday, 6 October 2009

Iran announced late last month that its foreign currency reserves would henceforth be held in euros rather than dollars.

In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.

Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.

The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years.

This sounds like a dangerous prediction of a future economic war between the US and China over Middle East oil – yet again turning the region's conflicts into a battle for great power supremacy. China uses more oil incrementally than the US because its growth is less energy efficient. The transitional currency in the move away from dollars, according to Chinese banking sources, may well be gold. An indication of the huge amounts involved can be gained from the wealth of Abu Dhabi, Saudi Arabia, Kuwait and Qatar who together hold an estimated $2.1 trillion in dollar reserves.

The decline of American economic power linked to the current global recession was implicitly acknowledged by the World Bank president Robert Zoellick. "One of the legacies of this crisis may be a recognition of changed economic power relations," he said in Istanbul ahead of meetings this week of the IMF and World Bank. But it is China's extraordinary new financial power – along with past anger among oil-producing and oil-consuming nations at America's power to interfere in the international financial system – which has prompted the latest discussions involving the Gulf states.

Brazil has shown interest in collaborating in non-dollar oil payments, along with India. Indeed, China appears to be the most enthusiastic of all the financial powers involved, not least because of its enormous trade with the Middle East.

China imports 60 per cent of its oil, much of it from the Middle East and Russia. The Chinese have oil production concessions in Iraq – blocked by the US until this year – and since 2008 have held an $8bn agreement with Iran to develop refining capacity and gas resources. China has oil deals in Sudan (where it has substituted for US interests) and has been negotiating for oil concessions with Libya, where all such contracts are joint ventures.

Furthermore, Chinese exports to the region now account for no fewer than 10 per cent of the imports of every country in the Middle East, including a huge range of products from cars to weapon systems, food, clothes, even dolls. In a clear sign of China's growing financial muscle, the president of the European Central Bank, Jean-Claude Trichet, yesterday pleaded with Beijing to let the yuan appreciate against a sliding dollar and, by extension, loosen China's reliance on US monetary policy, to help rebalance the world economy and ease upward pressure on the euro.

Ever since the Bretton Woods agreements – the accords after the Second World War which bequeathed the architecture for the modern international financial system – America's trading partners have been left to cope with the impact of Washington's control and, in more recent years, the hegemony of the dollar as the dominant global reserve currency.

The Chinese believe, for example, that the Americans persuaded Britain to stay out of the euro in order to prevent an earlier move away from the dollar. But Chinese banking sources say their discussions have gone too far to be blocked now. "The Russians will eventually bring in the rouble to the basket of currencies," a prominent Hong Kong broker told The Independent. "The Brits are stuck in the middle and will come into the euro. They have no choice because they won't be able to use the US dollar."

Chinese financial sources believe President Barack Obama is too busy fixing the US economy to concentrate on the extraordinary implications of the transition from the dollar in nine years' time. The current deadline for the currency transition is 2018.

The US discussed the trend briefly at the G20 summit in Pittsburgh; the Chinese Central Bank governor and other officials have been worrying aloud about the dollar for years. Their problem is that much of their national wealth is tied up in dollar assets.

"These plans will change the face of international financial transactions," one Chinese banker said. "America and Britain must be very worried. You will know how worried by the thunder of denials this news will generate."

Iran announced late last month that its foreign currency reserves would henceforth be held in euros rather than dollars. Bankers remember, of course, what happened to the last Middle East oil producer to sell its oil in euros rather than dollars. A few months after Saddam Hussein trumpeted his decision, the Americans and British invaded Iraq.

but Saudi Arabia denies holding a secret meeting to kill the USD

Saudi Bank Governor Denies Talks to Replace Dollar (Update2)
http://www.bloomberg.com/apps/news?p...d=apt5We30uqlA

Oct. 6 (Bloomberg) -- Saudi Arabia hasn’t held talks with China and other countries on dropping the dollar as the currency for pricing oil, Saudi Central Bank Governor Muhammad al-Jasser said, denying a report in the U.K.’s Independent newspaper.

The Independent report is “absolutely incorrect” and there has been “absolutely nothing” of that nature discussed between Saudi Arabia, the world’s biggest oil exporter, and other countries, al-Jasser told reporters in Istanbul, where he’s attending an International Monetary Fund summit. The dollar pared losses after his remarks.

The London-based newspaper said today that Gulf oil producers and nations including China, Japan, Russia and Brazil had held secret talks on a nine-year plan to phase out the dollar in oil trade, and move toward pricing the fuel in a basket of currencies plus gold. It cited unidentified Gulf officials and unidentified Chinese bankers.

interesting day today

[leonleon]

http://www.reuters.com/article/marke...0091006?rpc=44


"Weak dollar drives US gold to record high $1,043.20

NEW YORK, Oct 6 (Reuters) - U.S. gold futures scaled an
all-time high above $1,040 an ounce on Tuesday, gaining more
than 2 percent as a weakened U.S. currency prompted investors
to buy gold as a hedge against dollar-denominated portfolios."



Tuloy tuloy na kaya pag-angat niyan?

[uls]

who knows

gold bugs are saying it will go all the way up to $2,000 or $3,000

[tidus1203]

Eventually it will hit those numbers, don't worry about it...

Yen doing 88.22, we are nearing those Yen highs last seen when Lehman collapsed...

[uls]

AUD/USD hit .8950

strong demand for Aussie due to rate hike

investors chasing yield

[tidus1203]

At the height of 2007 the Aussie did 0.96 I remembered it very well since I was trading it that time... Overvalue alert

[uls]

Gold past $1,050

investors are still betting momentum would push gold price higher

[tidus1203]

Mark my world uls remember how oil went up in 2008 I smell similarities here. A lot of momentum playing, a lot of hot money, and a lot of speculation...

[tidus1203]

Mark my world uls remember how oil went up in 2008 I smell similarities here. A lot of momentum playing, a lot of hot money, and a lot of speculation...

[uls]

yes tidus, not just gold

there's tons of money out there chasing yield

thanks to the Fed's zero rates, money is being FORCED into risk assets

risk assets are being bid up all over the world

no fundamentals

investment banks, hedge funds, sovereign wealth funds, pension funds, retail investors will drive gold, equities and other risk assets much higher

How long can it last?

i don't know

i'm not standing in front of this train

as the saying goes -- the market can stay irrational longer than you can stay solvent

[leonleon]

there's tons of money out there chasing yield

thanks to the Fed's zero rates, money is being FORCED into risk assets

So who says there's a GLOBAL FINANCIAL CRISIS?

[tidus1203]

There still is a crisis, an unemployment crisis. They say the economy is improving pero its all money just changing hands more rapidly pero job losses are still rising, unemployment still rising. Money is very abundant as we have been arguing since last year pa. Madaming pera, pero hindi lang na circulate which weakens the economy. If all the rich guys keep their money in the bank or under their bed the economy gets slammed! But the Fed is printing money. We don't need more money, we need the rich folks to start investing again to turn the gears of the economy faster.

[uls]

there is a disconnect between the financial markets and the real economy

in the real economy, millions of people have lost their jobs, millions of homes have been foreclosed, office building and mall vacancies are up, retail sales are down, car sales are down...

but in the financial markets, asset prices are rising -- stocks, bonds, commodities

why the disconnect?

it's coz of the Fed's zero interest rate policy

the Fed has cheapened the USD and flooded the financial system with cheap money

since the market expects the Fed to keep monetary policy unchanged for the rest of the year, there's no interest rate risk on the USD

so a sure way to make money is by using the cheap USD to fund purchases of higher yielding assets

the dollar carry trade is flooding into all asset classes

everything's rallying -- stocks, HY bonds, gold

who is benefitting from this?

not average people

the big players are benefitting (the big banks -- JPM, Goldman, Citi)

the Fed will always protect the interests of its friends

[tidus1203]

GOLD. Still rising... Tiba tiba na tayong mga commodity bulls ah!

[uls]

yep

it's the weak USD

gold, oil, stocks go in opposite direction of the USD

central banks are dumping the USD, buying EUR, JPY

Dollar Reaches Breaking Point as Banks Shift Reserves
http://www.bloomberg.com/apps/news?p...d=a4x9dIJsPn4U

Oct. 12 (Bloomberg) -- Central banks flush with record reserves are increasingly snubbing dollars in favor of euros and yen, further pressuring the greenback after its biggest two- quarter rout in almost two decades.

Policy makers boosted foreign currency holdings by $413 billion last quarter, the most since at least 2003, to $7.3 trillion, according to data compiled by Bloomberg. Nations reporting currency breakdowns put 63 percent of the new cash into euros and yen in April, May and June, the latest Barclays Capital data show. That’s the highest percentage in any quarter with more than an $80 billion increase.

[tidus1203]

This thread has always been relevant...























in the LONG RUN!

So screw our critics!

[uls]

hehe

--

oil $74

oil is baaack

gained momentum last night

when oil breaks $75, momentum traders will keep bidding it up

--

gold $1067